On-prem cloud

Of course, it's a bit of a journalistic stretch to write that SAP will eventually sell Qualtrics. SAP wants to take Qualtrics public in the U.S. in order to do damage control. The benefit is supposed to be twofold: SAP gets some money back and Qualtrics can continue its run of success on its own.

The other side of the coin: The integration of this cloud solution into the SAP universe and the transformation to the Hana platform have obviously failed. It has not been possible to tame the Qualtrics algorithms and make them home on the Hana platform. It is a bitter defeat for SAP!

But Christian Klein already saw the disaster last summer, only he couldn't react then. In the meantime, numerous existing SAP customers have fallen for Qualtrics' integration promises. Now the bitter pill has to be swallowed: Qualtrics will remain independent. There will only be an end-to-end process in homeopathic and cosmetic experiments using Fiori.

The Qualtrics disaster will not be the only one. There are applications that are suitable for cloud computing and those that are not. Larry Ellison's conclusion is therefore consistent and correct: ERP users need a new cloud concept, perhaps also a new data center concept that goes beyond hybrid cloud. Oracle does not demonize the cloud principle, but criticizes the implementation.

ERP is an intimate challenge that should only come to fruition in a protected space. A modern data center is the natural home of an ERP. SAP legacy customers have screwed and tweaked consolidation, harmonization and virtualization for decades - it can't have been all wrong.

We have always relied heavily on our own data centers or on renting data center resources. With appropriate planning and long-term thinking, there are no disadvantages compared to hyperscalers. It's a question of horizon. If the CIO only looks as far as the next release upgrade, the hyperscalers' offers seem very tempting. If, on the other hand, the CIO looks at the existing intellectual property of his IT realm, then evaluation criteria emerge that make on-prem and cloud appear to be almost on a par.

Oracle is trying to preserve the value of an on-prem approach with a new cloud approach without sacrificing the scaling effects of cloud computing. Ellison's idea, however, is not a hybrid approach along the lines of taking only the best of both. Oracle is trying to marry two concepts from the ground up - hoping that one plus one will then make three. It seems that a new IT class, an on-prem cloud, is emerging here. This is not just a challenge for SAP, but also for the hyperscalers.

The Oracle concept poses a major threat to SAP because it ultimately calls into question the cloud-only and cloud-first philosophy. In purely business terms, SAP is already vegetating between the hyperscalers. SAP needs allies, but cannot build up its own expertise. SAP needs partners, but cannot compete with their prices.

It is a dilemma for SAP, whose current way out is, among other things, the stock exchange listing of Qualtrics. In addition, there are naturally applications that can only live and survive in the cloud: A trading platform like Ariba is a positive example. But the vast majority of CIOs would rather have their personnel data in their own safe.

SAP is our ERP market leader. SAP is an app innovator and the guiding culture for digital transformation. But SAP is not a cloud company - neither on the basis of a specific IT tradition nor on the basis of existing knowledge. The adage "cobbler, stick to your last" has rarely applied better to SAP than in the current cloud hysteria. If Oracle succeeds with its new on-prem cloud against the hyperscalers and other hybrid cloud concepts, SAP will be forced to change its strategy - which need not be to the detriment of us existing customers.